BMG's new CD copy protection scheme has been easily cracked by a Princeton …

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A grad student at Princeton University has discovered how to defeat the latest music CD copy protection scheme. It turns out that SunnComm Technologies' MediaMax CD3 software can be defeated by merely holding down the Shift key while the disc is inserted, or by stopping the driver installed by the CD the first time it is inserted into the optical drive. Of course, Mac OS X and Linux systems get a free pass as the software does not run on those OSes.

A spokesman for SunnComm was not immediately available to comment on the report. A spokesman for BMG, a unit of Bertelsmann AG , said the company viewed the software as a "speed bump" to prevent mass piracy of the disc. "We were fully aware that if someone held down the Shift key the first and every subsequent time [they played the disc] that the technology could be circumvented," BMG spokesman Nathaniel Brown told Reuters, adding the company "erred on the side of playability and flexibility."

Actually, a more accurate explanation is that BMG erred by trying to circumvent consumers' fair use rights with the MediaMax software. Right now, the industry and consumers are caught in a cycle of copy protection and circumvention. The labels have two choices: either stay the course, or properly react to what the market is telling them about music prices and distribution. Right now, they seem more interested in maintaining high margins than adjusting to changed expectations. Until they decide otherwise, the cycle will continue.